Advertising name-brand products that don’t actually have anything to do with the brand being named is called false advertising. It’s illegal, not only because it causes potential harm to the brand whose name is being abused, but to consumers who are misled as a direct result of the false advertising.
Costco has allegedly been selling diamond engagement rings that were marked “Tiffany” rings, and Costco salespeople allegedly told customers the rings were “Tiffany” rings. Although the wholesale retailer has never sold jewelry from the famous Tiffany & Co., and has never used the company’s trademark blue boxes, the wholesale company does sell diamond rings with a pronged setting, which it claims is commonly known as a “Tiffany” setting.
The problem was that Costco did not call them “Tiffany setting” rings or “Tiffany-style” rings. It just called them “Tiffany” rings, which understandably led to some confusion.
Despite the fact that customers got upset when they realized the rings labeled “Tiffany” were not actually from the famous jewelry store, Costco allegedly still did not see a problem with how they were marketing their generic diamond engagement rings. Tiffany & Co. disagreed and sued the wholesale company for trademark infringement.
The court sided with Tiffany, which was awarded $8.25 million in punitive damages by a jury last fall. Judge Laura Taylor Swain recently added to that amount by ruling that the famous jewelry chain was entitled to $11.1 million in profits, plus interest, bringing the total award for the plaintiff to more than $19 million. Judge Swain added in her ruling a provision that bars Costco from ever again using the name “Tiffany” by itself when marketing its jewelry. The provision allows for the use of terms like “Tiffany setting” or “Tiffany style,” both of which provide more clarity than the use of the name “Tiffany” by itself.
Costco continues to insist it did nothing wrong and that it will appeal the ruling, which the company said was a result of multiple errors that were made throughout the trial process, but Judge Swain is not buying any of the retail giant’s arguments. Instead, she pointed out that the attitude of Costco’s upper management was careless at best when testifying about their use of the term “Tiffany” to sell their diamond rings.
Whether an appeal will be granted to the wholesale company remains to be seen, but in the meantime, Tiffany & Co. is celebrating the judge’s ruling as a victory. The jewelry company has been very explicit about the fact that it does not make its jewelry available outside of its own stores, aside from its limited collaboration with Net-a-Porter. It said in a statement that it never has and never will sell any of its jewelry through large wholesale chain stores, including Costco.
After the judge announced her ruling, Tiffany released a statement that the ruling validates the value and strength of Tiffany’s brand, while also acting as a message to Costco and other retailers who might consider infringing on that brand.
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